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Shashi Tharoor
Shashi Tharoor, a member of Indias parliament, was Indian Minister of State for Foreign Affairs from 2009-2010, and served as United Nations Under-Secretary-General from 2001-2007. In addition to his expertise in Indian foreign policy and global affairs, he is an author of literary fiction, whose novels, including Riot, The Great Indian Novel, and Show Business, explore the intricacies of Indian society and the hidden underpinnings of its everyday life.
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There are other reasons for confidence that India will weather the storm. Not only does India have considerable resources of its own to put towards investment; as the persistence of global recession drives down returns in the West, foreign investors will look anew at India. Still, many are inclined to compare India unfavorably with China, so a few macroeconomic numbers are worth considering. Half of Indias growth has come from private consumption, and less than 10% from external demand; by contrast, 65% of Chinas real GDP growth comes from exports, and only 25% from private consumption. China is thus far more vulnerable to external shocks. Moreover, India has the highest household savings rate in Asia, at 32% of disposable income. In fact, households account for 65% of Indias national annual savings, compared to under 40% in China. Bad loans account for only 2% of Indian banks credit portfolios, versus 20% in China. And Indias workforce has been growing at nearly 2% annually in the last decade, while Chinas grew at less than 1%. Putting China aside, Indias economy grew by 6.5% in 2011-2012, with services up by 9% and accounting for 58% of Indias GDP growth a stabilizing factor when a world in recession cannot afford to buy more manufactured goods. McKinsey & Company estimates that the Indian middle class will grow to 525 million by 2025, 1.5 times the projected size of the US middle class. According to last years census, the countrys 247 million households, two-thirds of them rural, reported a rise in the literacy rate to 74%, from 65% in 2001. In just the last two years, 51,000 schools were opened and 680,000 teachers appointed. An impressive 63% of Indians now have phones, up from just 9% a decade ago; 100 million new phone connections were established last year, including 40 million in rural areas; and India now has 943.5 million telephone connections. Nearly 60% of Indians have a bank account (indeed, more than 50 million new bank accounts have been opened in the last three years, mainly in rural India). Some 20,000 MW in additional power-generation capacity was added last year, with 3.5 million new electricity connections in rural India. As a result, 8,000 villages got power for the first time last year, and 93% of Indians in towns and cities now have at least some access to electricity. These trends all augur well for Indias economic future. And they arent slowing: India is looking for $1 trillion in infrastructure development over the next five years, most of it in the form of public-private partnerships. This offers hugely exciting opportunities to investors. The real picture of dogged progress is far removed from the perception of a government beset by inaction and policy paralysis. As Prime Minister Manmohan Singh modestly put it: I will be the first to say we need to do better. But let no one doubt that we have achieved much. Read more from our "Will India's Boom Go Bust?" Focal Point. This article is available online at: http://www.project-syndicate.org/commentary/the-indian-miracle-lives Copyright Project Syndicate - www.project-syndicate.org
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